Tuesday

September 2, 2014

September 2, 2014

Posted by **Teresa** on Sunday, January 30, 2011 at 11:13pm.

Cascade last paid a dividend of $1 per share 2010. In 2007, the Cascade paid a dividend of $0.89. This dividend growth rate is expected to be constant for the foreseeable future if the merger is not completed. If the merger is successful, the expected dividend for next year, that is, D1 is expected to be $1.03 and the new long-term growth rate will be 7.5% as a result of the merger.

What is the expected new beta of cascade after the acquisition?

The risk-free rate is 7% and the market return is estimated as 12%. What is your estimate of the required return of investors in Cascade before and after the acquisition?

What is the value of a share of Cascade prior to the acquisition?

What is the new value of a share of stock in Cascade, assuming the acquisition is completed?

Would you recommend that Cascade go ahead with the acquisition? Please support your answer.

**Answer this Question**

**Related Questions**

finance - Cascade Mining ($28Mil Assets) has an estimated beta of 1.6. The ...

Finance - Cascade Mining Company expects its earnings and dividends to increase ...

Finance - Cascade Mining Company expects its earnings and dividends to increase ...

math - How would you establish this identity: (1+sec(beta))/(sec(beta))=(sin^2(...

Biology - I'm looking for an explanation of the clotting cascade. It is supposed...

pre calc - suppose beta is an angle in the second quadrant and tan beta=-2. ...

Trigonometry - Prove that tan (Beta) sin (Beta) + cos (Beta) = sec (Beta) Please...

investing - You have a $ 2 million portfolio consisting of $100,000 investment ...

Economics - Sun State Mining Inc., an all-equity firm, is considering forming a ...

Financial Management - You have a $2 million portfolio consisting of a $100,000 ...